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Given the demands of clients and the press of business, lawyers and law firms frequently overlook the fact that they are also employers who are subject to the often-confusing myriad of workplace regulations imposed by the state and federal employment laws. A recent administrative determination by the U.S. Department of Labor reaffirming its position that paralegals are eligible for overtime pay is yet another reminder that lawyers should heed the admonition of Benjamin Franklin: “Mind thy shop, and thy shop will mind thee.” On Jan. 7, the Labor Department’s wage and hour division issued an opinion letter reaffirming its longstanding position that most paralegals and legal assistants do not qualify for the “learned professional” exemption under the Fair Labor Standards Act, 29 U.S.C. �� 201-19, and are therefore eligible to earn overtime pay. By way of background, the FLSA, the federal statute that governs the payment of wages to employees, classifies all workers into two broad categories: (1) “nonexempt,” i.e., employees who must be paid at least the minimum wage for all hours up to 40 in a work week and a premium of one and one-half times the rate of regular pay for all hours in excess of 40 hours a week; or (2) “exempt,” i.e., employees who are paid on a salary or fee basis and are not eligible for overtime pay. The statutory presumption is that all employees are nonexempt unless they fall into one of the specific exemptions set forth in the FLSA and its accompanying regulations, which cover many executive, administrative and professional employees as well as outside salespersons and some computer professionals.
Who’s a Paralegal, Anyway?By Valerie A. DolanThe use of paralegals in the legal field — no matter if the work venue is a law firm, a corporation or a government entity — has significantly changed in the last 30 years. It has now progressed to the point that paralegals are looking for increased respect and recognition within the legal community. In some cases, that also means the need for regulation and legislation.Changes in the paralegal profession are ongoing and involve developments at both the state and federal levels. The U.S. Department of Labor recently promulgated changes to the rules regarding white-collar exceptions to the Fair Labor Standards Act and reaffirmed that paralegals are nonexempt employees. One of the steps that needs to be taken in the quest for paralegal regulation is adoption of a precise definition of a paralegal. California became the first state to do so with legislation that sets forth a comprehensive definition, practice limitations and educational requirements for paralegals and “legal document assistants” working there.The American Bar Association defines paralegals as people who “work under the supervision of attorneys and are not ‘document preparers’ working directly with the public.” Some states have set forth definitions of legal document preparers in order to stop the public’s confusion regarding this relatively new term, notifying the public that these individuals are not attorneys and cannot give legal advice. Several states have recently taken action in this area:Illinois lawmakers enacted the Legal Document Preparer Act, which provides that, as of July 1, 2006, no person shall engage in the preparation of legal documents unless the person is certified. It also establishes the Board of Legal Document Preparers and outlines its duties and powers, provides eligibility requirements for certification, sets out the services that may be provided by a legal document preparer, provides guidelines for the application process and the renewal of certification, provides for disciplinary actions and provides for a code of conduct for legal document preparers.In Arizona, the Legal Document Preparer Program certifies legal document preparers, defining them as certified individuals who prepare or provide legal documents without the supervision of an attorney. Legal document preparers may provide general legal information but may not give legal advice. All individuals and businesses preparing legal documents without the supervision of an attorney in good standing with the state bar of Arizona must be certified.The next question now becomes who will regulate paralegals? In New Jersey, for example, the state Supreme Court several years ago established a committee to study the practice of paralegals and make recommendations to the court. In 1999, the court concluded that “direct oversight of paralegals is best accomplished through attorney supervision rather than through a court-directed licensing system.”The court declined to follow a recommendation by its committee that it establish a regulatory scheme to govern the practice of paralegals. In addition, the court, while declining to require court certification of paralegals, encouraged consideration of “the development of an appropriate credentialing system by paralegals, attorneys and their respective associations.”The need for regulation, licensing, certification and education of paralegals has finally come to the front lines. The need for continuing legal education should also be recognized as a necessary step in the process of regulating paralegals. The following are examples of action taking place in various states around the country:In North Carolina, state legislators in 2003 considered the Paralegal Profession Act, which called for a certification process for paralegals. Although the bill did not pass, paralegals there have been working with the North Carolina Bar Association to draft a plan for certification of paralegals. Florida’s Legislature took up a bill in March, the Paralegal Profession Act, which would establish provisions regarding regulation of paralegals, continuing-education requirements and other matters. The proposed law provides for a paralegal code of ethics and professional responsibility, along with the creation of a Paralegal Regulation Board.The Wisconsin Supreme Court is now considering a petition from the Wisconsin State Bar for the licensing of paralegals. With the adoption of paralegal regulation, new issues will arise regarding such matters as malpractice, fees and the reality of providing cost-effective legal services to the public.An especially significant issue in several parts of the country stems from differences in legal terminology that exist in the United States and other countries. For example, the Spanish word “notario” can mean “lawyer” in Mexico and other countries while having a completely different meaning in the United States.The future of the paralegal profession, in terms of its interaction with both the legal industry and the general public, is under scrutiny from the judiciary. Paralegals around the country are increasingly becoming active through their national, state and local professional associations, in helping to shape their future in the legal workplace.Valerie A. Dolan is a litigation and domestic relations paralegal at Philadelphia’s Dolchin, Slotkin & Todd.

At issue for paralegals and legal assistants is the question of whether they fall under the FLSA’s exemption for “learned professional” employees. As defined by the Labor Department’s regulations, for an employee to be “employed in a bona fide professional capacity,” the employer must show that: (1) the employee is compensated on a salary or a fee basis at a rate of at least $455 a week; and (2) the employee’s primary duty is performing work that requires knowledge of an advanced type in a field of science or learning that is customarily acquired by a prolonged course of study or specialized intellectual instruction; or requires originality, invention, imagination, or talent in a recognized field of artistic or creative endeavors. Not surprisingly, lawyers are viewed as a classic example of an exempt professional. But failure to meet just one prong of the exemption’s test will result in the employee being classified as nonexempt and eligible for overtime. To better understand this test, “work requiring advance knowledge” means that the work has a predominantly intellectual character and requires the consistent exercise of discrimination and judgment. Work that involves routine mental, manual, mechanical or physical work does not qualify under the “advanced knowledge” standard. The advanced knowledge used by an exempt employee at work must be in a field of science or learning. This typically includes such fields as aviation, biology, chemistry, education and actuarial computation. However, whether an employee’s job duties require the use of advanced knowledge is fact sensitive and is determined by courts on an ad hoc basis. Finally, the advanced knowledge used by the employee must be of the type that is customarily acquired by participating in a prolonged course of specialized intellectual instruction. To satisfy this prong, specialized academic training must be a prerequisite to entrance into the profession, as is the case for doctors, registered nurses, teachers, engineers and architects. In its January opinion letter, the Labor Department stated that, as a general rule, paralegals and legal assistants do not meet this test for learned professionals and, therefore, are ordinarily nonexempt. The department reached this result because it concluded that an advanced, specialized degree is typically not required for paralegals and legal assistants to enter the field. While recognizing that many paralegals and legal assistants possess general four-year degrees from colleges, the Labor Department also noted that most specialized paralegal programs are merely two-year associate degree programs that are offered by community colleges or equivalent institutions. The Labor Department did recognize that it is possible that paralegals and legal assistants could qualify as learned professionals under Section 13(a)(1) of the FLSA if they possess advanced specialized degrees in other, nonlegal professional fields and apply that advanced knowledge towards performance of their work duties. For instance, the opinion letter provided an example of an engineer who is hired as a paralegal and applies his or her advanced knowledge to provide expert advice on product liability or patent cases for a law firm. In that case, the paralegal would be using the advanced knowledge from an engineering degree towards the performance of paralegal duties and would be properly classified as an exempt professional under the FLSA. Significantly, the Labor Department pointed out that its position on the nonexempt status of paralegals and legal assistants was not altered by the issuance of new and controversial wage and hour regulations in August 2004. Despite receiving numerous comments during the rulemaking process urging that paralegals and legal assistants be classified as exempt learned professionals, the department noted that no one provided any evidence to demonstrate that a paralegal or legal assistant is required to have an education greater than a two-year associate’s degree to enter the profession. Wage-and-hour laws have become increasingly important to employers in the wake of a sharp rise in litigation under various federal and state workplace laws. The intricate, confusing and often counterintuitive nature of these laws, coupled with the prospect of mandatory awards of attorneys’ fees for successful suits, have contributed to heightened interest in this area among members of the plaintiffs’ bar. Law firm employers are not immune from these trends and should be conducting audits of all positions for compliance with the new Labor Department regulations and reviewing payroll deductions to ensure compliance with state and federal wage-and-hour laws. Steven W. Suflas is a labor-and-employment partner at Ballard Spahr Andrews & Ingersoll’s office in Voorhees, New Jersey. Jennifer L. Sova is an associate at the firm.

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